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After a global downturn that made executives cautious and conservative,companies are now preparing for a returnto growth.Since launching our first survey of Management Tools & Trends in 1993, we have tracked executives’ attitudes and behaviors through a wide range of economic cycles. We watched as managers pulled away from the recession of 1990–91, maneuvered through the speed bumps of 1996, slowed for the painful 2001 recession andslammed into the Great Recession of 2007–09.Familiar patterns are emerging: profoundfear that the world has deteriorated forever is followed by increasing optimism that economic challenges strengthened companies’ positionsand the future will now be brighter.
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Management Tools &Trends 2011By Darrell Rigby and Barbara Bilodeau
After a global downturn thatmade executives cautious andconservative, companies arenow preparing for a returnto growth.
Copyright © 2011 Bain & Company, Inc. All rights reserved.Content: Editorial teamLayout: Global Design
Darrell Rigby, a partner with Bain & Company and leader of Bain’s Global Retailand Global Innovation practices, has conducted Bain’s Management Tools & Trendssurvey since 1993. Barbara Bilodeau is director of Bain’s Customer Insights Group.
1
Management Tools & Trends 2011
After a global downturnthat made executivescautious and conserva-tive, companies are nowpreparing for a returnto growth.
Since launching our first survey of Management
Tools & Trends in 1993, we have tracked exec-
utives’ attitudes and behaviors through a wide
range of economic cycles. We watched as man-
agers pulled away from the recession of 1990–91,
maneuvered through the speed bumps of 1996,
slowed for the painful 2001 recession and
slammed into the Great Recession of 2007–09.
Familiar patterns are emerging: profound
fear that the world has deteriorated forever is
followed by increasing optimism that economic
challenges strengthened companies’ positions
and the future will now be brighter.
In 2009, executives expressed deep concerns
about the long-term effects of the downturn
(see Figure 1). Seven out of 10 worried about
their ability to meet earnings targets, and grow-
ing numbers turned to cost-cutting tools such
as downsizing and outsourcing to cope with
slowing sales. Today, executives overwhelm-
ingly cite revenue growth as their organizations’
most important priority over the next three
years—three times more often than any other
priority, and six times more often than cost
containment (see Figure 2).
Agree Disagree
Culture is as important as strategy for business successOur ability to change is a significant competitive advantageInnovation is more important than cost reduction for long�term successIt feels like economic conditions are improving in our industryCountries should reduce trade barriers and increase free trade agreementsTaking care of customers and employees should come before shareholdersWe have used the recession to improve our competitive positionThe recent downturn has changed consumer behavior for at least three more yearsGovernment regulation of business will increase over the next five yearsOver the next three years, we will focus more on revenue growth than cost reductionA growing percentage of our products and services behave like commoditiesOutsourcing may be politically unpopular, but everyone benefits in the endOur top executives are comfortable taking higher risks for potentially higher returnsI am very concerned about how we will meet earnings targets in 2011We will pursue sustainability initiatives even if they hurt our profitsInsufficient consumer insight is hurting our performanceOur international revenues will grow faster than domestic revenues over the next five yearsLocal companies will be more successful than multinationals in emerging marketsAlmost all of today’s market leaders will still be leaders five years from nowWe are planning for economic stagnation over the next two to three years
89%81%80%74%69%68%65%64%64%63%59%51%50%49%46%45%45%39%35%24%
4%8%8%
13%8%
17%13%17%14%21%20%22%29%31%28%30%31%31%44%56%
Source: Bain survey
Figure 1: The view on management trends
2
Management Tools & Trends 2011
Executives are concerned that consumer behav-
iors won’t immediately bounce back to pre-
recession levels. Among large companies (those
with more than $2 billion in revenues), 59
percent fear that the downturn has changed
consumer behavior for at least three more
years, suggesting that consumers will be less
willing to spend money in certain product
categories. Still, that’s down from 75 percent
who believed so in 2009. Furthermore, three-
quarters of the 1,230 executive participants from
a broad range of industries, countries and
company sizes told us that it feels like economic
conditions are improving in their industry.
Only a quarter of our respondents expect the
economy to stagnate over the next two or three
years. And an increasing number of respon-
dents believe that today’s market leaders still
will be leaders in five years—a sentiment that
reflects confidence in the ability of top busi-
nesses to continue to outperform competitors
that were weakened by the downturn.
Feeling better positioned for
the future
While the majority of these executives believe
the impact of the downturn will persist into
the future, they also feel they’re well prepared
for the challenges. Two-thirds of the executives
believe they’re emerging from this recession
in a stronger competitive position. We asked the
same question in 2002, when many economies
“What is your organization’s most important priority over the next three years?”
Percent of respondents who mentioned
Source: Bain survey
0
10
20
30 29
1110
87
65 5 5
21
Revenuegrowth
Customersatisfaction/
loyalty
Increasedprofitability
Newmarkets
Increasedmarketshare
Innovation Costcutting/
containment
Employees Newproducts/services
Marketing/positioning
Sustain�ability
Figure 2: Revenue growth is a key priority for executives
3
Management Tools & Trends 2011
were still reeling from the dotcom bust. At that
time, less than half of those executives had re-
ported using the downturn to get in better shape.
Many companies undoubtedly used the recent
turbulence to trim organizational layers, tighten
operations and take other moves that contribute
to becoming a more effective and efficient
player. Many managed to improve sales and
profits. However, we see a risk in too readily
believing that a company has put itself on a
superior, lasting competitive footing. First,
it’s difficult for two-thirds of all companies to
improve faster than their competitors. The
math just doesn’t work. Second, this attitude
can breed complacency, putting at risk the
hard-earned benefits companies achieved
during the downturn.
Nevertheless, renewed confi dence encourages
prudent risk taking, and executives are now
focusing on growth over cost cutting. As we
mentioned earlier, when we asked executives
to state their top priority over the next three
years, one theme dominated: growth, includ-
ing international expansion. Almost two-thirds
of the respondents are planning to put more
emphasis on growing revenues over the next
three years—that’s a 10 percent rise from our
2009 survey, and it’s the highest level since
we began asking it in 2001. In addition, almost
half of the executives see growth coming from
foreign markets, as they believe international
revenue growth will outpace domestic revenue
growth between now and 2015.
This focus on growth is reflected through-
out our survey findings. For example, despite
the sting of the downturn, 80 percent of the
executives still believe innovation is more
important than cost reduction for long-term
success. Also, 68 percent of respondents believe
that taking care of customers and employees
should come before shareholders. One way
to interpret this finding: executives realize
that growth depends on having happy, pro-
ductive employees and satisfied customers.
Shareholder returns will be the natural by-
product. A third sign that companies are fa-
voring growth over cost cutting: downsizing
and outsourcing are much less likely to be
added to manager’s tool kits than are other
tools in 2011.
Tools to spur growth
Our survey looks at the usage and satisfaction
rates of 25 of the most popular management
tools (see Figure 3). Given the renewed empha-
sis on growth, it is no surprise that executives
are less likely to rely on downsizing or out-
sourcing and more likely to lean on a variety
of growth-related management tools in the
year ahead. The three tools that the largest
number of executives say they will start using
in 2011 are open innovation, scenario and
contingency planning and price optimization
(see Figure 4). Although we have consistently
found that executives predict higher increases
in usage than actually ends up happening, the
fact that these tools currently have the largest
4
Management Tools & Trends 2011
Open innovationScenario and contingency planningPrice optimization modelsSatisfaction and loyalty managementKnowledge managementCustomer segmentationDecision rights toolsBusiness process reengineeringStrategic alliancesCore competenciesSocial media programsEnterprise risk managementShared services centersTotal quality managementCustomer relationship managementChange management programsSupply chain managementRapid prototypingStrategic planningMergers & acquisitionsBenchmarkingBalanced scorecardMission and vision statementsOutsourcingDownsizing
Projected 2011 usage
57%65%55%64%69%71%46%67%73%73%56%57%53%62%82%69%60%32%86%53%83%63%78%68%31%
Projected increase
36%35%34%32%31%29%29%29%28%27%27%27%25%24%24%23%21%21%21%18%16%16%15%13% 6%
Actual 2010 usage
21%30%21%32%38%42%17%38%45%46%29%30%28%38%58%46%39%11%65%35%67%47%63%55%25%
Source: Bain survey
Figure 4: Expected change in usage
• Balanced scorecard
• Benchmarking
• Business process reengineering
• Change management programs*
• Core competencies
• Customer relationship management
• Customer segmentation
• Decision rights tools
• Downsizing
• Enterprise risk management*
• Knowledge management
• Mergers & acquisitions
• Mission and vision statements
• Open innovation
• Outsourcing
• Price optimization models
• Rapid prototyping*
• Satisfaction and loyalty management
• Scenario and contingency planning
• Shared service centers
• Social media programs*
• Strategic alliances
• Strategic planning
• Supply chain management
• Total quality management
*Tool added to the survey in 2011
Figure 3: We focused on 25 of the most popular tools
5
Management Tools & Trends 2011
predicted increases—more than 30 percent—
reflects the current mindset of executives.
Open innovation allows companies to expand
the sources of breakthrough products; scenario
and contingency planning helps executives
test the “what ifs” to prepare for the future
better and minimize risks; price optimization
addresses another future concern—rising
commodity prices. As prices increase, execu-
tives are unsure about how much of the cost
they realistically can pass on to customers,
especially in uncertain economic times. Price
optimization models, used correctly, will help
them identify the optimal price point.
The pursuit of growth is also leading executives
to try new tools like social media programs.
As more and more companies climb aboard
the social media bandwagon, executives feel
pressure to test out its promise: using online
communities like Facebook, micro-blogging
sites such as Twitter and corporate websites
to try to strengthen bonds and grow loyalty
with employees, customers and partners.
While only 29 percent of all respondents say
they used social media in 2010, usage is ex-
pected to surge to 56 percent in 2011. Even
so, executives tell us they’re uncertain about
how to measure the effectiveness of this tool.
To determine if social media is a passing fad
or a valued tool to help spur growth, companies
often start by testing the waters—beginning
with a limited investment. If they’re satisfied
with the results, then they up the ante.
But this approach carries two risks. First, while
it’s understandable that companies do not
want to make major investments before they
fully understand how a tool will work, we have
found that using tools on a limited basis con-
sistently leads to lower satisfaction, so caution
may inadvertently result in failure. The second
risk we have found: companies start using a
tool because their competitors are using it, or
because it’s the hot topic in the business press,
but if they do not fully understand how and
why to use it, the experience ends up in failure.
Think of business process reengineering, where
we witnessed an inverse relationship between
usage and satisfaction rates when it was the
hot tool of the 1990s. We witnessed reengi-
neering drop from the tool with the fifth highest
satisfaction rate in 1993 all the way to 21st in
the late 1990s. It was only after usage rates
declined that satisfaction began to improve
again. Any time we see high usage but low
satisfaction, there is cause for concern.
We are not suggesting companies should not
use social media programs, only that they need
to be thoughtful about why they are using it,
they need to invest enough to make it suc-
cessful and they should have a plan to measure
whether they are receiving the desired return
on investment.
The big picture:
Tool use and satisfaction
Tool usage tends to ebb and flow with economic
conditions. In boom years, companies use
6
Management Tools & Trends 2011
more tools, rising with larger budgets and
the launching of more initiatives. In tough
times, companies cut back on almost every-
thing, including management tools. Therefore,
it is no surprise that worldwide tool use has
steadily declined since 2006, hitting the lowest
level this year since we started our survey in
1993. The average now is 10 tools, down from
11 tools when we surveyed executives in 2008
and 15 tools in 2006.
Large companies consistently use more tools
than smaller firms (see Figure 5). On average,
they use about 30 percent more tools, and in
downturns the gap actually expands. In 2010,
large and midsize companies used approxi-
mately the same number of tools as they did
when we conducted our survey two years ago.
Small companies used an average of nine tools
in 2008 and only eight in 2010. Typically,
smaller, budget-constrained companies are the
first to abandon tools when the economy sours.
These companies used 10 of the tools less in
2010 than they did in 2008. The only tool
smaller companies used more in 2010 than in
2008 was satisfaction and loyalty management.
Two years ago, the worldwide downturn re-
ordered the list of most used tools, as companies
searched for effective ways to execute fast-
shifting priorities. Benchmarking, ranked as
the most popular tool for the first time in a
decade, displaced strategic planning, a perennial
No. 1. In 2010, benchmarking still tops the
Large companies (>$2B+)* Midsize companies ($600M – <$2B)* Small companies (<$600M)*
0
5
10
15
20
16.1
13.1
15.9
10.6 10.4
0
5
10
15
20
15.2
11.7
14.3
9.2
7.8
0
5
10
15
20
16.216.8
11.6 11.7
2002 2004 2006 2008 2010
*Based on annual revenuesSource: Bain survey
17.4
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
Figure 5: Larger firms use more management tools
7
Management Tools & Trends 2011
Benchmarking
Strategic planning
Mission and vision statements
Customer relationship management
Outsourcing
Balanced scorecard
Change management programs
Core competencies
Strategic alliances
Customer segmentation
1
2
3
4
5
6
7(t)
7(t)
9
10
Global North America
3
2
4
1
6
12(t)
9
5
7
15(t)
Europe
1
3
5(t)
2
5(t)
8(t)
4
8(t)
7
12
Asia
4
2
3
1
5
10(t)
8(t)
6
8(t)
10(t)
Latin America
3
1(t)
1(t)
6
4
5
9
10(t)
8
7
Note: (t) = tiedSource: Bain survey
Figure 6: Top 10 most used tools
list overall, but use varies by region, reflecting
changing short- and long-term strategies.
Our survey found that tried-and-true tools pro-
vided continued comfort through the downturn
(see Figure 6). In addition to benchmarking,
the most widely used tools were strategic plan-
ning and mission and vision statements. These
are time-tested tools that have rated in the
top 10 for usage over the years, regardless of
the economic climate.
The least used tools include open innovation,
price optimization models, decision rights
tools and rapid prototyping. One tool that was
surprisingly unpopular was mergers & acqui-
sitions. During a downturn, M&A deals often
create bargains that give the acquiring company
increased scale and broadened scope. Yet in
each recession we see relatively few deals.
Only 35 percent of the executives in our current
survey took advantage of M&A. Even though
price tags for some deals are on the rise, more
executives—more than half—now say they
expect to use M&A in 2011. That’s in line with
past trends: M&A activity typically increases
in boom times.
We ask executives to rate their satisfaction with
the tools they use (see Figure 7). Strategic
planning is the tool with the highest satisfaction
rating. Other tools with above-average sat-
isfaction scores include mission and vision
statements, total quality management, customer
segmentation and strategic alliances. There
were clear satisfaction losers. Downsizing,
8
Management Tools & Trends 2011
outsourcing and shared services centers—all
of which are used to reduce head count—are
three of the five tools with below-average sat-
isfaction scores. The other two tools with low
satisfaction ratings are knowledge management
and social media programs.
Tool use by region
This year marks the first time that firms in
emerging markets used more tools than their
counterparts in developed markets. Their in-
creased interest in management tools sug-
gests that companies in areas with booming
economies—places like Brazil, India and China—
are becoming more sophisticated competitors,
relying more heavily on business tools to im-
prove their chances at success.
Sometimes the difference is dramatic. Take
balanced scorecards. Over half of the emerging-
market executives have used the tool to help
gauge whether their strategies are delivering
results. In contrast, more than one-third of
the established market respondents are using
the tool. The disparity in the use of decision
rights is even greater: three times as many
emerging-market users are employing it to
improve their decision making than executives
in established markets.
Tool use helps give us a clear view of regional
priorities. For example, benchmarking surfaced
as the most widely used tool for firms in Europe,
where economic uncertainty persists. But in
North America, customer relationship man-
agement (CRM) ranked as the most used tool,
Usage
Soruce: Bain survey
10
25
40
55
70
80%
3.50 3.60 3.70 3.80 3.90 4.00 4.10
Rapid prototyping
Mergers & acquisitions
Change management programs
OutsourcingCustomer relationship management
Strategic planningBenchmarking
Satisfaction
Decision rights tools
Price optimization modelsOpen innovationDownsizing
Shared service centersSocial media programs
Scenario and contingency planning
Enterprise risk management
Satisfaction and loyalty management
ReengineeringTotal quality managementKnowledge management
Supply chain management
Customer segmentationStrategic alliances
Core competencies
Balanced scorecard
Mission and vision statements
Figure 7: 2010 usage and satisfaction (on a scale of one to five)
9
Management Tools & Trends 2011
A history of Bain’s Management Tools & Trends Survey
Starting in 1993, Bain & Company has surveyed executives around the world about the
management tools they use and how effectively those tools have performed (see figure below).
We focus on 25 tools, honing the list each year. To be included in our survey, the tools need
to be relevant to senior management, topical and measurable. By tracking which tools com-
panies are using, under what circumstances and how satisfied managers are with the results,
we’ve been able to help them make better choices in selecting, implementing and integrating
the tools to improve their performance.
With this, our 13th survey, we now have a database of more than 11,000 respondents and
can systematically trace the effectiveness of management tools over the years. As part of our
survey, we also ask executives for their opinions on a range of important business issues. As
a result, we are able to track and report on changing management priorities.
For a full definition of the 25 tools, along with a bibliographical guide to resources on each
one, please see the Bain & Company booklet Management Tools 2011: An Executive’s Guide
on www.bain.com.
Surveys and 11,163 respondents covering an 18-year span
0
20
40
60
80
100%
1993–2011
Other
Latin America
Asia�Pacific
EMEA
North America
11,163
2011
Latin America
Asia�Pacific
EMEA
North America
1,230
10
Management Tools & Trends 2011
as executives put more emphasis on using
customer insights to jump-start—and sustain—
revenue growth. North American executives
also are quicker than their counterparts else-
where in the world to adopt social media
programs, a tool that wasn’t included in the
survey two years ago but now ranks as number
eight in North America. Nowhere else in the
world does the tool land higher than 17th. That
may be a result of the much higher Internet
penetration rate of consumers in the US and
the heavy use and publicity of sites such as
Facebook and Twitter.
Breaking out tool use by region highlights
distinct differences among the top 10 tools.
• In addition to being the heaviest users of so-
cial media programs, North American exec-
utives use downsizing more frequently than
their counterparts elsewhere in the world.
• European firms lead in the use of change
management programs.
• Asian companies are top users of knowledge
management, a tool companies use to
strengthen their organizations by taking
full advantage of intellectual assets.
• Latin American firms use more tools than
any other region. Their willingness to
embrace a wide range of tools reflects
their efforts to identify growth opportunities
Where’s the optimism?
Where is optimism the strongest? To find out, we created an optimism scale, scoring executives
based on their answers to four statements:
• We have used the recession to improve our competitive position.
• It feels like economic conditions are improving in our industry.
• I am very concerned about how we will meet earnings targets in 2011.
• We are planning for economic stagnation over the next two to three years.
We found that Latin American firms are the most optimistic: Companies in those countries
scored the highest, followed by Asian firms. In contrast, companies in harder-hit North
America and Europe are more pessimistic. When broken out by size, optimism is spread
fairly evenly across different sized companies.
11
Management Tools & Trends 2011
and increase revenues in a vigorous econ-
omy. They’re the lightest users of downsizing,
rapid prototyping and CRM.
When we looked at management trends by
regions we also found distinct differences.
For example, North American executives seem
to be more cautionary than their counterparts
elsewhere in the world. One clear message:
they have become more resistant to free trade.
We last asked executives opinions on free trade
in 2003. At that time, 74 percent of North
American and 81 percent of European execu-
tives believed that countries should reduce trade
barriers and increase free trade agreements.
This year, only 53 percent and 59 percent, re-
spectively, agreed. In contrast, Asian and Latin
American executives, who potentially have
more to gain from fewer trade restrictions,
remain strong supporters with 78 percent and
77 percent, respectively, agreeing.
In addition, North American executives are
less likely to innovate. Only 72 percent of North
American executives agree that innovation is
more important than cost reduction—that’s
the lowest percentage globally. By comparison,
87 percent of Asian executives agree that in-
novation is more important.
Meanwhile, North Americans are less likely to
push on sustainability if it hurts their profits.
Among all regions, North American firms
are the least interested in pursuing sustain-
ability initiatives if they hurt profits. Asian
executives are the group most interested in
sustainability at all costs.
A comparison of emerging and established
markets on these and other issues also revealed
significant differences. Emerging-market ex-
ecutives are more concerned about meeting
their earnings targets in 2011. And more of
them believe that government regulations
will increase over the next five years. They also
believe that local companies will be more suc-
cessful in emerging markets than multinationals,
reflecting a confidence in their ability to com-
pete with global players.
A look at large companies
Tool use by companies with $2 billion or more
in revenues dropped dramatically between
2006 and 2008 as executives watched the re-
cession start to take a toll on sales. Then, usage
by large companies held steady between 2008
and 2010, as executives positioned themselves
for recovery. Four tools were used by large
companies significantly more often in 2010
than in 2008—strategic planning, total quality
management, satisfaction and loyalty man-
agement and decisions rights tools—reflecting
executives’ shift from a short-term, cost-saving
outlook to improving performance and cultivat-
ing more satisfied, loyal consumers. Over the
past two years, large companies also reduced
their reliance on two downturn-related tools:
business process reengineering and downsizing.
The signs of recovery were also evident in
large-company executives’ responses to our
management trends questions. For example,
as compared with 2008, fewer executives are
worried about meeting their earnings target.
12
Management Tools & Trends 2011
More say they are emerging from the reces-
sion in better shape than they did in 2002.
More top executives at large companies also
say they are comfortable taking greater risks
in pursuit of higher returns. And they’re less
likely to believe that products and services
are being treated like commodities than in
previous years.
When viewed on a regional basis, our survey
responses to trends questions shed light on
noteworthy shifts in opinion around the globe.
For example, North American large-company
executives may be losing enthusiasm for out-
sourcing. There was a 25 percent drop since
2004 in the number of those executives who
agree that outsourcing benefits everyone. Mean-
while, Asian executives appear to have grown
more confident as competitors as their economies
have boomed. One indicator: fewer executives
feel their products are being treated like com-
modities—the number has dropped from 92
percent in 2004 to 60 percent in 2010.
Latin American executives, too, are facing the
near-term future with increasing self-assurance.
In Latin America, we saw a significant boost
in the number of large-company executives
who believe that today’s market leaders will
still be in the lead five years from now. Fewer
large firms are concerned about meeting their
growth targets than were in 2008, and fewer
believe they should focus on revenue growth
over cost reduction than in 2004. One inter-
pretation of these shifts: large Latin American
companies are more confident and happy with
their rate of growth and they’re now looking
for ways to trim costs and boost profit mar-
gins, particularly as they were less likely to
downsize during the recession than their
global counterparts.
As executives throughout the world make the
decisions that will guide their companies into
the future, they’ll need to heed the lessons of
past recessions. If our 18 years of surveying
executives has taught us anything, it’s that
periods of gloom are typically followed by an
exuberant optimism that makes it easy to for-
get the cautionary mindset of the recent past.
Winners will avoid the over-confidence of too
quickly believing they’re in a better position
than their competitors. They will avoid the
complacency that could cause them to lose the
efficiency gains they earned in the downturn.
And they will remember that capturing the op-
portunities of a recovering economy takes risk-
taking—but it should be prudent risk-taking.
Bain’s business is helping make companies more valuable.
Founded in 1973 on the principle that consultants must measure their success in terms of their clients’ financial results, Bain works with top management teams to beat competitors and generate substantial, lasting financial impact. Our clients have historically outperformed the stock market by 4:1.
Who we work with
Our clients are typically bold, ambitious business leaders. They have the talent, the will and the open-mindedness required to succeed. They are not satisfied with the status quo.
What we do
We help companies find where to make their money, make more of it faster and sustain its growth longer. We help management make the big decisions: on strategy, operations, technology, mergers and acquisitions and organization. Where appropriate, we work withthem to make it happen.
How we do it
We realize that helping an organization change requires more than just a recommendation. So we try to put ourselves in our clients’ shoes and focus on practical actions.
Management Tools & Trends 2011
For more information, please visit www.bain.com